Section 80c and house property deduction

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

15 March 2013 Dear Sir,

I have purchased a house property in the name of my wife.

During the year I have paid interest on housing loan of 190000/- and principal repayment of 120000/-

the loan is in my name but house in the name of my wife.

can I claim deduction u/s. 80C and u/s. 24(b)

Regards

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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15 March 2013 Yes, you can claim. To claim deduction it is important on whose name loan is taken.

OM SAI SRI SAI JAI JAI SAI

Santosh Mishra

Santosh Mishra (Expert)
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15 March 2013 No.

You need to be a co-owner in the property as well to claim loan benefits.

You can not claim deductions even you are borrower and paying EMI.

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Querist : Anonymous

Querist : Anonymous (Querist)

15 March 2013 But sir
plz go through the below link

coz I think both husband and wife would not be able to claim the deductions

https://www.caclubindia.com/experts/housing-loan-deduction-845065.asp#.UULGYxdHLTp

regards

Santosh Mishra

Santosh Mishra (Expert)
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15 March 2013 Yes, thery are right.

Your question was whether I can claim the benefits, so I replied that you can not claim the benefits.

Your wife can not claim the benefits as well as she is not paying any loan.

Querist : Anonymous

Querist : Anonymous (Querist)

15 March 2013 @Santosh Mishra Sir,

Thank you Sir,

actually the above mentioned reply was for Dintakurthi Tirumala ji.

Regards,

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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15 March 2013 My view is different and according to my view i think it is eligible for deduction in the hands of husband. And may be my view is wrong.

But can you support your answer with any case law, or case study or decisions of any courts or any provisions of sections etc.... or shall give any basis of your answer. However in the link above given there is also no conclusion to that query and experts replied their view and not supported their answer with any provision or sections or case law or etc... and no basis.

But my view is different however i will produce my view in my next reply.

OM SAI SRI SAI JAI JAI SAI

Santosh Mishra

Santosh Mishra (Expert)
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15 March 2013 Please enlighten us with your supporting.

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Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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15 March 2013 My View is as follows:

According to the clubbing provisions if any asset transferred to any other person with out proper consideration or as gift then any income earned from such asset is taxable in the hands of transferror as well as if any loss from such asset also liable for deduction of set-off or carry forward in the hands of transferror.

And to claim deductions under section 80C the investments should be made form the taxable income.(this clears as per the Chapter VIA deductions allowable maximum of gross total income i.e gross total income contains only taxable income thus deduction under chapter VIA should be from investments made from taxable income)

In the given case Husband purchased a house in the name of wife by borrowing funds from bank and repaying it from his sources of income i.e husband given gift to wife and to acquire such gifted asset the funds should be incurred from the funds of husband i.e wife didn't paying any amount for such gift and only husband baring all the funds to acquire such gifted property. Thus husband given gift of house property to his wife.

As per the clubbing provision any loss or income from such gifted house property is taxable in the hands of husband. As well as he has housing loan. Assume the income from such gifted house is zero(because of self occupied assumed) and as well as husband has the housing loan and accrued interest which is according to section 24(b) is Rs. 36000 assumed. So income from such gifted property is zero and expenditure for that property is u/s 24(b) is Rs.36000 thus loss from house property is Rs.36000 in the hands of husband.

As well as he repaying housing loan from the taxable income(assuming he has another sources of taxable income) so he making the investment from taxable income. Thus he is eligible for section 80C deduction.

This is my view. So please support your answer what you said previous with any case study or case law or decisions of courts or etc... or any basis of provisions or sections then i also agree with based on the said case study or etc.... Because of according to my knowledge i didn't notice any such case law or etc.... for this query in our discussion otherwise please confirm your answer with analysis of my view and compare.

Note: Still now i didn't noticed or didn't came to my knowledge to claim deductions u/s80C for repayment of housing loan and interest on housing loan u/s 24(b) the both house property and housing loan are should be in the name of the assessee who claiming deductions.

So please confirm me. My view may be wrong and there be any other provisions regarding your views so please correct me and help to me to update my knowledge.

Thank you,

OM SAI SRI SAI JAI JAI SAI

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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15 March 2013 If any doubts to understand my view you can ask.

OM SAI SRI SAI JAI JAI SAI

Santosh Mishra

Santosh Mishra (Expert)
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15 March 2013

As per section 27, If an individual transfers a house property to his or her spouse (except inconnection with an agreement to live apart) or to a minor child (except a married daughter) without adequate consideration, he is deemed as the owner of the property for tax purposes.

Also there is nothing mentioned like transfer of property in query. so please do not confuse the user with complicated tax provisions.

But I request experts for their opinion/views.

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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15 March 2013 However section 24(b) indicating as follows.

Interest on borrowing can be claimed as deduction only by the person who has acquired or constructed the property with borrowed funds. It is not available to the successor to the property(if the successor has not utilised borrowed funds for acquisition, etc..).In other words, the relattionship of borrower and lender must come into existence before it can be said that any amount or any other money is borrowed for the purpose of construction, acquisition, etc... of house property by one person from another and there must be a real transaction of borrowing and lending in order to amount to any borrowing.

i.e to claim deduction u/s 24(b) it is required to purchase or construct a house property with the borrowed funds but it not saying the purchased or constructed property should be on the name of the person who borrowed funds.

OM SAI SRI SAI JAI JAI SAI

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Santosh Mishra

Santosh Mishra (Expert)
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15 March 2013 Ok. one of my friend wish to construct an house, he borowwed some money from me which I paid him thru a bank loan, So as per you I can would get exemption for the interest as well as principal.

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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15 March 2013 I think you are not thinking about clubbing provision. first confirm me is for the given case clubbing provision applicable or not if applicable then income(assume income has for such property) from such house property where it is taxable in the hands of husband is at under the income from houseproperty head or under income from other sources head.

In you question you asked you taking loan from bank and it given to your friend to purchase house by him is eligible for deduction u/s24(b) in you hands. I said the above provision the borrowed amount should be use for the purpose of construct or purchase of house to claim deduction u/s24(b) but in your case you used it for other purpose other than purchase or construction of house property so not eligible for deduction u/s24(b). Because of you given loan to your friend from your borrowing funds not used for the purpose of purchase or construction of house. In case assume you given gift to your friend from you borrowing funds instead of loan to him then also you not eligible for deduction u/s24(b) because of you didn't used the borrowing funds for the purpose of purchase of construction of house. As well as your friend invested such gifted money in the house property then according to the clubbing provision if any income from such house property will be taxable in your hands but you not eligible for deduction u/s 24(b) because of you didn't used borrowed funds to purchase or construction of house you used it to give gift to your friend but your friend invested it in house property and such invested amount is not the borrowed money to your friend. In case assume you purchased a house property on your friend name from the borrowing funds with out receiving any amount from your friend i.e you given gift to your friend then clubbing provision applicable and you used borrowed funds for the purpose of purchase of construction of house property.

So first confirm me is clubbing provision applicable or not for our above query if applicable is the income from house property is taxable in the hands of husband under income from house property or under income from other sources then i will analise about section 27.

However the above all are my view based on the income tax provisions available but i didn't have any case study or case laws or decisions to my views and answers etc.....

As well as according to me while we calculating the income and deductions for the purpose of computation of taxable income we should be consider the all the provisions of income tax which effects and relates to the incomes and deductions which we considering.

OM SAI SRI SAI JAI JAI SAI

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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15 March 2013 You thinking about the transfer of house property by husband to wife. I.e first husband has to own the property on his name and then it shall be transferred to his wife but in your case there is no transfer it is directly purchase on the name of wife and sources of wife to acquire such property is by gift of her husband. So i think section 27 not related this. However if section 27 attracts this then also according to the section 27 husband is the deemed owner and income from such house property is taxable in the hands of husband and as per the income tax provisions deductions are available from taxable income. So according to this view also i think my answer and view may be correct.

For best clarification example: Assume there is gross agricultural income is Rs.1,00,000 to earn such gross agricultural income the farmer incurred Rs.50,000 for cultivation and other expenses then we are saying agricultural income is Rs.50,000 but not saying agricultural income is Rs.1,00,000 as well as deduction of Rs. 50,000 doesn't allowed from any other sources income because of expenditure met to earn income such earned income is exempted to tax thus expenses also not allowed as deduction from the taxable income. But in your case there is no exemption income there is income from house property and which it is ZERO(0) assuming self occupied property. so deduction available.

OM SAI SRI SAI JAI JAI SAI

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Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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15 March 2013 And one more thing.

Assuming your answer is correct. And assume there is income from house property i.e such property is given to let out and rent earned Rs.60,000 per annum then this income on which hands taxable is it in the hands of wife or in the hands of husband.

My request don't feel boor to deal this take it with a chalange and try to get the facts and realities and try to give the maximum benefit to the assessee.

If i making boor to you and hurting you i am really very very very sorry my view is not to hurt you but to learn knowledge and no about subject.

As well as i am not against your answer but i requiring supporting of your answer if there is no any support then why we not think like me. Is my question?

OM SAI SRI SAI JAI JAI SAI

Santosh Mishra

Santosh Mishra (Expert)
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15 March 2013 Cool. Let’s wait for opinions from other experts.I would respond but I wish to have some opinions from other experts.

Dear All

Request you to kindly provide your inputs.

Santosh Mishra

Santosh Mishra (Expert)
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15 March 2013 Since the interest is deducted for the annual value taxable in the hands of owner of the house property, whatever deduction is to be given in case of property you are referring, shall be to your wife only.

The simple reason is that she is owner of the property and income from house property is chargeable only in her hand.

This is true even if the EMI is paid by you.

In my opinion, you are not eligible for claiming the interest.

Dear Mr Dintakurthi

I could not go thru the essay posted by you. I have given my opinion on this subject and have requested others for their inputs.

Querist : Anonymous

Querist : Anonymous (Querist)

16 March 2013 Dear Experts,

The charging section of house property i.e section 22 states that

Income from house property.
"The annual value of property consisting of any buildings51 or lands appurtenant51 thereto of which the assessee is the owner51, other than such portions of such property as he may occupy51 for the purposes of any business or profession carried on by him the profits of which are chargeable to income-tax, shall be chargeable to income-tax under the head "Income from house property".

The charging section says that, income under head house property would be taxable in the hands of OWNER.

The act aain defined owner and deemed owner.

So, My view is that, if The property is not registered in the name of husband then he can not take the benefit of section 80c and section 24.

Clubbing provisions are not applicable in the given case as the property is not a gifted one.

Regards